Summary of Audit Results for: Gettysburg Area School District June - - PowerPoint PPT Presentation

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Gettysburg Area School District June 30, 2018 Summary of Audit Results for:

1.800.745.8233 www.stambaughness.com

December 28, 2018 To the Board of School Directors Gettysburg Area School District We have audited the financial statements of Gettysburg Area School District for the year ended June 30, 2018, and have issued our report thereon dated December 28, 2018. Professional standards require that we communicate certain matters relating to our audit. We are pleased to present the results of our audit in this communications package. As always, we appreciate the opportunity to continue our relationship and value your confidence in us. To maintain this confidence, we continue to develop our business model to deliver both value-added industry insight and strong technical service. This information is intended solely for the use of the Board of School Directors and management of Gettysburg Area School District and is not intended to be, and should not be, used by anyone other than these specified parties. Sincerely,

Stambaugh Ness, Inc.

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Contents

• Responsibilities - Ours and Yours
• Audit Scope and Results
• Other Required Communications
• Financial Review
• Matters of Internal Control
• Client Service Team

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Responsibilities

We are responsible for:

• Performing an audit in accordance with Generally Accepted Auditing

Standards (GAAS)

• Forming and expressing an opinion about whether the financial

statements prepared by management:

• Are materially correct
• Are fairly presented
• Conform with U.S. GAAP
• Communicating significant matters to you

An audit provides reasonable, not absolute, assurance that the financial statements do not contain material misstatements due to fraud or error. It does not relieve management or those charged with governance from your responsibilities.

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Responsibilities

You are responsible for:

• Preparing and fairly presenting the financial statement in accordance

with U.S. GAAP

• Designing, implementing, evaluating and maintaining effective internal

control over financial reporting

• Providing us with unrestricted access to all persons and information

relevant to our audit

• Informing us about fraud, illegal acts, significant deficiencies and

material weaknesses

• Informing us of subsequent events
• Providing us with certain written representations

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Audit Scope

Planning, Risk Assessment and Materiality

• GAAS requires that we consider the District’s internal control as a basis for designing our

auditing procedures.

• Materiality is a measure of an error or omission that likely would influence a “reasonable

person’s” interpretation of the financial statements. We have used revenues and expenses as benchmarks for setting materiality.

Adjustments - professional standards require us to accumulate all known and likely

misstatements identified during the audit, other than those that we believe are trivial, and communicate them to the appropriate level of management. Further, professional standards require us to communicate the effect of uncorrected misstatements related to prior periods on the relevant classes of transactions, account balance or disclosures, and the financial statements as a whole.

• Recorded adjustments (Fund Level) - None
• Recorded adjustments (Government-wide Level) - Assisted with GASB 65, 68 and 75

entries

• Unrecorded adjustments - One adjustment for the 60 Day Rule for tax revenue
• Omitted disclosures - None

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Audit Scope

Areas of Audit Emphasis

• Internal control over financial reporting
• Consideration of fraud in accordance with AU-C Section 240
• Payroll related transactions
• Operating revenues and expenses
• Capital projects
• Fund Balance designations
• Compliance with Uniform Guidance (federal grants)

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Audit Results

• The auditors’ report expresses an unmodified opinion on

the financial statements of the District.

• No instances of noncompliance material to the financial

statements of the District were disclosed during the audit.

• The auditors’ report on compliance for the major federal

awards program for the District expresses an unmodified

• pinion.

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Required Communications

Compliance with All Ethics Requirements Regarding Independence

The engagement team, others in our firm, as appropriate, our firm, and our network firms have complied with all relevant ethical requirements regarding independence.

Significant Accounting Policies

Management has the responsibility to select and use appropriate accounting policies. There have been no initial selection of accounting policies and no other changes in significant accounting policies or their application during 2017-2018. No matters have come to our attention that would require us, under professional standards, to inform you about:

• the methods used to account for significant unusual transactions and,
• the effect of significant accounting policies in controversial or emerging areas for which

there is a lack of authoritative guidance or consensus.

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Required Communications

Significant Accounting Estimates

Accounting estimates are an integral part of the financial statements prepared by management and are based on management’s current judgments. Those judgments are normally based on knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ markedly from management’s current judgments. The most sensitive accounting estimates affecting the financial statements in our opinion were:

• Useful lives of fixed assets for calculation of depreciation
• Management’s consideration of an allowance for uncollectible taxes
• Calculations of future liabilities for compensated absences and other post-

employment benefit liabilities

• Measurement of PlanCon subsidy receivables

We evaluated the key factors and assumptions used to develop the estimates described above in determining that they are reasonable in relation to the financial statements taken as a whole.

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Required Communications

Financial Statement Disclosures

Certain financial statement disclosures involve significant judgment and are particularly sensitive because of their significance to financial statement users. The most sensitive disclosures affecting the District's financial statements in our opinion relate to:

• Note D - Taxes Receivable and Deferred Tax Revenues - Page 50
• Note H - General Obligation Bonds/Notes - Pages 51 - 52
• Note J - Defined Benefit Pension Plan - Pages 54 - 59
• Note K - Other Post-Retirement Health Benefits - Pages 60 - 64
• Note O - Lincoln Benefit Trust - Page 66

Significant Difficulties Encountered During the Audit

We encountered no significant difficulties in dealing with management relating to the performance of the audit.

Disagreements with Management

Professional standards define a disagreement with management as a matter, whether or not resolved to our satisfaction, concerning a financial accounting, reporting, or auditing matter, which could be significant to the financial statements or auditors’ report. No such disagreements arose during the course of the audit.

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Required Communications

Representations Requested from Management

We have requested certain representations from management that are included in the management representation letter dated December 28, 2018.

Management’s Consultations with Other Accountants

In some cases, management may decide to consult with other accountants about auditing and accounting matters. Management informed us that, and to our knowledge, there were no consultations with other accountants regarding auditing and accounting matters.

Other Significant Matters, Findings or Issues

In the normal course of our professional association with the District, we generally discuss a variety of matters, including the application of accounting principles and auditing standards, business conditions affecting the entity, and business plans and strategies that may affect the risks of material misstatement. None of the matters discussed resulted in a condition to our retention as the District’s auditors.

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Financial Highlights - June 30, 2018 Budget vs. Actual - General Fund (modified accrual)

(Amounts summarized from the audited financial statements)

Budgeted Amounts Actual

Variance

(Budgetary

w/ Final Budget

Original Final Basis)

Positive (Negative)

Total revenues 59,976,944 $ 59,976,944 $ 61,251,282 $ 1,274,338 $ Total expenditures 61,890,202 62,376,837 59,618,474 2,758,363 Excess (deficit) of revenues

• ver expenditures

(1,913,258) (2,399,893) 1,632,808 4,032,701 Total other financing sources (uses) (2,802,558) (2,315,923) (1,942,442) 373,481 Net change in fund balances (4,715,816) $ (4,715,816) $ (309,634) 4,406,182 $ FUND BALANCE - BEGINNING 23,716,554 FUND BALANCE - ENDING 23,406,920 $

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Financial Highlights - June 30, 2018

Fund Balance Designations - General Fund (modified accrual)

(Amounts summarized from the audited financial statements)

FUND BALANCES Nonspendable: Inventories 76,004 $ Prepaid expenses 284,465 Restricted: Lincoln Benefit Trust 3,773,496 Committed: Capital improvements 1,700,000 Retirement/PSERS 4,669,151 18/19 Budgetary reserve 3,388,591 Unassigned: General fund 9,515,213 Total fund balances 23,406,920 $

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Financial Highlights - June 30, 2018 Trend Analysis - General Fund (modified accrual)

(Amounts summarized from the audited financial statements)

June 30, 2018 June 30, 2017 June 30, 2016 June 30, 2015 June 30, 2014 REVENUES Local revenues 42,037,205 $ 41,140,472 $ 40,133,076 $ 39,253,636 $ 37,959,066 $ State program revenues 18,169,840 17,638,867 16,689,911 15,878,810 14,944,504 Federal program revenues 1,044,237 1,069,469 1,209,899 1,166,243 866,937 Total revenues 61,251,282 $ 59,848,808 $ 58,032,886 $ 56,298,689 $ 53,770,507 $

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Financial Highlights - June 30, 2018 Trend Analysis - General Fund (modified accrual)

(Amounts summarized from the audited financial statements)

June 30, 2018 June 30, 2017 June 30, 2016 June 30, 2015 June 30, 2014 EXPENDITURES Regular programs 24,662,727 $ 23,433,506 $ 23,364,233 $ 21,399,720 $ 20,562,135 $ Special programs 7,400,446 7,244,549 6,606,101 6,124,372 5,595,234 Vocational programs 3,127,230 3,032,589 3,014,952 2,971,725 2,744,872 Other instructional programs 647,158 715,383 789,533 707,571 813,596 Nonpublic school programs 16,533 19,711 25,283 38,744 28,326 Pupil personnel services 1,548,649 1,489,354 1,544,383 1,389,087 1,550,667 Instructional staff services 1,641,793 1,585,117 1,439,734 1,283,362 905,167 Administrative services 3,353,310 3,318,636 3,190,216 3,030,592 2,721,820 Pupil health 604,227 608,554 570,952 536,466 489,316 Business services 756,896 768,741 760,170 718,676 720,862 Operation and maintenance of plant services 5,433,072 5,322,593 5,584,846 5,017,796 4,590,851 Student transportation services 3,177,410 3,068,590 3,073,782 3,071,475 3,080,907 Central and other support services 956,035 1,029,324 1,013,954 862,673 957,472 Other support services 39,443 58,764 58,480 65,851 68,138 Student activities 1,178,720 1,123,817 1,060,279 1,058,049 1,023,083 Community services 31,232 14,718 17,413 11,463 10,849 Architect & engineering services

• 3,000
• Debt service

5,035,423 5,380,740 5,436,006 5,448,939 5,445,365 Refund of prior year receipts 8,170 8,121 1,449 104,256 34,432 Total expenditures 59,618,474 $ 58,225,807 $ 57,551,766 $ 53,840,817 $ 51,343,092 $

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Financial Highlights - June 30, 2018 Trend Analysis - General Fund (modified accrual)

(Amounts summarized from the audited financial statements)

June 30, 2018 June 30, 2017 June 30, 2016 June 30, 2015 June 30, 2014 OTHER FINANCING SOURCES (USES) Sale of fixed assets 25,472 $ 1,892 $ 7,846 $ 5,360 $ 100 $ Interfund transfers in

• 24,973

Interfund transfers out (1,967,914) (744,713) (109,751) (1,263,136) (6,108,432) Total other financing sources (uses) (1,942,442) $ (742,821) $ (101,905) $ (1,257,776) $ (6,083,359) $

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Financial Highlights - June 30, 2018

Trend Analysis - Food Service Fund (full accrual)

(Amounts summarized from the audited financial statements) June 30, 2018 June 30, 2017 June 30, 2016 Operating Revenues 599,915 $ 624,280 $ 631,890 $ Operating Expenses 1,781,498 1,704,339 1,809,280 Operating Loss (1,181,583) (1,080,059) (1,177,390) Nonoperating Revenues (Expenses) 1,249,920 1,237,419 1,173,517 Change in Net Position 68,337 $ 157,360 $ (3,873) $

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Matters of Internal Control

In planning and performing our audit, we considered the District’s internal control over financial reporting (internal control) as a basis for designing our auditing procedures, but not for the purpose of expressing our

• pinion on the effectiveness of the District’s internal control. Accordingly, we do not express an opinion on the

effectiveness of the District’s internal controls. Our consideration of internal control was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal controls that might be significant deficiencies or material weaknesses and, therefore, there can be no assurance that all deficiencies, significant deficiencies, or material weaknesses have been identified. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses.

Definitions

• A deficiency in internal control exists when the design or operation of a control does not allow

management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis.

• A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less

severe than a material weakness, yet important enough to merit attention by those charged with governance.

• A material weakness is a deficiency or combination of deficiencies in internal control, such that there is

a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis.

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Client Service Team

Team Member Role Contact Information Krista Gardner Principal

kgardner@stambaughness.com

Rick Hogentogler Technical Reviewer

rhogentogler@stambaughness.com

Terry Thomas Manager

tthomas@stambaughness.com

Erin Fike Advisor

efike@stambaughness.com

Charles Hawk Staff

chawk@stambaughness.com

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About Stambaugh Ness

Vision: “To be our clients most trusted and consulted Advisor”

• Industry Groups - established to provide

industry insight and enhance the value of service

• Technical Service Teams - responsible for

high-level competencies

• SN Business Solutions - provides

complementary technology solutions

• BDO - the “Best of Both Worlds”, adds flexibility

and scalability to our technical competencies

• Strategic Partners - complementary services

for various business needs